Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Chavez Ex's Exxon


Pressure on oil prices remains high.

Intensifying the battle between oil-rich Venezuela and Exxon Mobil (XOM), Venezuelan President Hugo Chavez announced he will turn off the spigot to the world's biggest oil company in retaliation for the firm's decision to freeze billions of dollars in state oil assets.

A legal victory last week in British courts gave Exxon the power to prevent Venezuela from accessing over $12 billion of its assets around the world. Further antagonizing the South American leader, Exxon delayed informing him of the ruling for 24 hours – a move Bloomberg reports netted Exxon $242 million in profits.

At issue is a conflict dating back to last year, when Venezuela forcibly took a majority interest in four Western oil projects in the country. Most oil companies involved accepted minority stakes and pressed forward, but Exxon and Conoco Philips (COP) refused to back down. Exxon and Venezuela's state-run oil company Petroleos de Venezuela, or PSVDA, have been locked in a legal battle ever since.

Venezuela is the United States' fourth largest supplier of energy, and its sulfur-heavy crude is some of the hardest to process in the world. Exxon is one of the few refiners with the facilities to handle the heavy crude, but according to the Wall Street Journal Venezuela may just sell its oil to third parties who could then sell it to Exxon at a higher price.

Concerns over a slowing global economy have pressured crude prices, which have retreated from recent highs. Venezuela's socialist state is heavily reliant on government money to function, and a drop in oil prices may reduce its ability to continue generous social programs.

Further, the country's high dependence on petrodollars means the measure is a risky one for Chavez, whose popularity at home is already waning. However, since over two thirds Venezuela's oil ends up in American fuel tanks, Chavez may be hard pressed to toe the line.
No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opin= =3D =3D3D ion about the performance of securities and financial markets by = the wr=3D iter=3D3D s whose articles appear on the site. The views expresse= d by the wri=3D ters are=3D3D not necessarily the views of Minyanville Medi= a, Inc. or members=3D of its man=3D3D agement. Nothing contained on the web= site is intended to con=3D stitute a recom=3D3D mendation or advice address= ed to an individual investor =3D or category of inve=3D3D stors to purchase= , sell or hold any security, or to =3D take any action with re=3D3D spect t= o the prospective movement of the securit=3D ies markets or to solicit t=3D= 3D he purchase or sale of any security. Any inv=3D estment decisions must b= e made =3D3D by the reader either individually or in =3D consultation with = his or her invest=3D3D ment professional. Minyanville write=3D rs and staff= may trade or hold position=3D3D s in securities that are discuss=3D ed in = articles appearing on the website. Wr=3D3D iters of articles are requir=3D = ed to disclose whether they have a position in =3D3D any stock or fund disc= us=3D sed in an article, but are not permitted to disclos=3D3D e the size o= r direct=3D ion of the position. Nothing on this website is intende=3D3D d = to solicit bus=3D iness of any kind for a writer's business or fund. Mi= ny=3D3D anville mana=3D gement and staff as well as contributing writers wi= ll not respo=3D3D nd to em=3D ails or other communications requesting inves= tment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.

Featured Videos